I've seen a lot of confusion about fundamentals. So a few things for those who are learning.
- Market cap is calculated by: (coins in circulating supply) x (trading price). Simple example, if a particular coin has 1000 in existence and one person trades one coin for $10, that coins market cap is $10,000. It only takes one trade to change the market cap, but everyone needs to continue trading at that price to maintain it.
- When you trade fiat for crypto, the fiat does not go to "the market". The fiat goes to whoever you traded it to, so it doesn't make sense to ask how many dollars are "in the market".
- When the market cap goes down 100 billion dollars that does not mean 100 billion dollars has "left the market".
- It is not a good comparison to compare crypto market cap to company stock value. Corporations do hold their investments and use it to generate profits. Crypto does not do that and is instead a medium of exchange. If it can be compared to anything, it would be the global money supply which sits just around 100 Trillion.
- The only time circulating supply goes down is a coin burn. If you buy a coin and hold it, it's still in the circulating supply. Technically, coins can be lost too but that's not really factored into market cap calculations.
I know most of you know this but I've seen a few comments from people who did not understand these things.
